In November last year, negotiations between Tabcorp and Tatts Group over a potential merger came to a halt because of disagreements over valuations and share price performances. Last week, however, an analyst with Deutch Bank predicted that the two would seek to resume talks in March this year, following the February reporting season.
Analyst Mark Wilson said that while both Tabcorp and Tatts confirmed that no discussions were currently taking place relating to the merger or any other form of corporate transaction, the bank believed that Tabcorp would continue to assess the merits of a merger or the acquisition of Tatts' wagering business.
"We believe the focus will now shift to the performance of Tatts' wagering business post its repositioning with the companies likely to re-engage post March 2016," said Wilson.
Australian Gambling Regulation Issues
In terms of regulatory issues that a potential merger between Tabcorp and Tatts may come up against, Wilson quick to dismiss concerns. He said that he believed that any regulatory risks could be overcome by way of providing undertakings to state governments and racing bodies.
"We do not believe that the ACCC would block such as transaction given the significant changes to the industry since 2006," said Wilson.
Market watchers predict that Tabcorp would be willing to pay up to $4.75 per Tatts share.
Revival of Tatts/Tabcorp Deal
Last week Tabcorp's CEO, David Attenborough refused to comment on whether his company would revive talks with Tatts.
He did, however, voice his objection to in-play betting on live sports and slammed international bookmakers who already offer this option. He said that "it's not good for racing and it's not good for pubs and clubs if online betting on live sports is legalized."
Nevertheless, Attenborough said that Tabcorp would launch its own in-play product if the federal government legalized it as a betting platform.